Working to find a new natural resource deposit holds many intangibles, not the least of which is the fact that a company is drilling or digging a small hole thousands of feet into a relatively unknown medium. The company may have an idea what they will find, but this is not the same as a certainty. This is just the nature of the game. This variable, however, is not the only one that dictates whether a natural resource company is a winner or a loser in the game of exploration and development. The market for the resource also needs to align for a solid profit. If, however, each variable does pan out, a nice profit will likely result for the investor who times his decisions correctly.
Kentucky USA Energy Inc., an early-stage oil and gas exploration and development company, works to exploit oil and natural gas deposits primarily in Western Kentucky. The company is currently completing several wells at its Illinois Basin/Albany Shale projects.
Mid-September finds the company nearing completion and flow testing of 6 wells at its Albany Shale leases. Although flow test results have yet to be published, the company does indicate that initial expectations should remain near original projections. These same projections estimate that the company’s current work in the region has the potential to yield 24 bcf of gas over a 15-year period. Total technically recoverable reserves in the Albany Shale region are estimated to be in the 1.9 tcf range by the USGS. Several smaller gas companies drill in the company’s drill area.
As with many commodity-type investments, the key to possible success is making the investment as close to the moment of product extraction and sale as possible. In this particular instance, that moment is most likely now. Test results may prove different then expectations, but initiation is about to commence, a buyer has been signed and gas prices are spiking with current economic conditions.
These prices may well return to a lower level as market speculation finds a more stable base, but flow rates from the company’s wells will tell the tale for initial revenue projections. There have been many new oil and gas companies entering the marketplace of late, with the likelihood of one having success over the other rated at about even. With this in mind, Kentucky USA Energy’s ability to find success in a proven gas field is just as high as any other company working within the region (which is many.)
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